A wrong-headed question on ‘Obamacare’
KTIV (Sioux City, Iowa): “One of those businesses that I mentioned said very specifically when they said they needed to close up shop and move their jobs back to Wisconsin was that it was a direct result of the health care reform that you initiated, that Congress passed. How do you react to that?”
President Obama: “Yeah, that would be kind of hard to explain, because the only folks that have been impacted in terms of the health care bill are insurance companies who are required to make sure that they’re providing preventive care, or they’re not dropping your coverage when you get sick. And so, this particular company probably wouldn’t have been impacted by that.”
— exchange on June 11, 2012
This is a story of how an uninformed question became fodder for the presidential campaign.
Shortly after this interview aired, the Weekly Standard posted a blog item with this headline: “Obama Surprised to Learn Obamacare Is Hurting Small Businesses.”
Then, the next morning, the presumptive GOP nominee, Mitt Romney, appeared on Fox News and declared: “He’s had a number of very revealing comments that show just how far out of touch he is with what’s happening in the country. Yesterday he said, among other things, that he didn’t realize that Obamacare is having any impact on small business.”
Romney suggested Obama read a new survey of small businesses from the U.S. Chamber of Commerce, which purported to show that small businesses were less likely to hire workers because of the health care law. (More on that survey below.)
Now, watching the video clip, it’s hard to see why someone would think Obama appears surprised. Despite Romney’s claim, he certainly doesn’t say he did not realize this problem. But he does seem a bit puzzled by the question, as should anyone: Why would a company consolidate offices in another state because of a national health care law?
We decided to investigate.
The company in question is Nemschoff Inc., which makes chairs and other furnishings for the health care industry, including hospitals. This should have raised a red flag because it is no small business. It is a subsidiary of Herman Miller Inc. (which makes super-nice office furniture), an international company with $1.6 billion in annual revenue. When Herman Miller acquired Nemschoff in 2009, it reported that Nemschoff had annual revenue of more than $90 million.
Small businesses are generally defined as having annual revenue of less than $25 million. So the basic frame of the question was wrong, since this is not a small business. But it is even worse than that.
As Romney well knows from his experience at Bain Capital, companies decide to consolidate offices for all sorts of the reasons. In this case, the answer is readily available from Herman Miller’s financial reports and discussions with analysts, as it has tried to explain why its health care business, such as Nemschoff, was dragging down profits.
In a March 22 conference call with analysts, Herman Miller’s chief executive, Brian Walker, put much of the onus on the fact that the federal government was attempting to trim spending. Here’s what he said:
Our health care business has a heavier mix of federal government business than our total business, i.e., it's heavier weighted towards federal government. So when you look at what's happened in health care for us, the government is down generally. The impact on the health care business has been greater because of the pullback in the federal government.
In other words, cutbacks in federal government spending — precisely what Republicans such as Romney have demanded — led to the closure of the Nemschoff facility in Iowa, not the health care law.
Herman Miller spokesman Mark Schurman, echoing comments he made to our colleague Greg Sargent, added one other point — that the uncertainty surrounding the health care law had also chilled some investment in new facilities. “We never said it was the health care act,” he said. “The question is what, if anything, is going to enacted.”
After all, Romney says almost every day that he will halt the health care law if he is elected president. So it is no surprise that businesses would be reluctant to place bets based on the notion that the health care law will be fully implemented.
Okay, so the company was not a small business and it did not consolidate facilities because of the health care act. No wonder Obama was confused.
As for that Chamber of Commerce survey, we suggest that Obama skip reading that. This is yet another one of those online surveys from which you can draw virtually no broader conclusions. (We had earlier dinged Obama for citing an online survey for his claim that millionaires support the Buffet Rule.)
Here’s a notice that is buried in the Chamber news release about the poll: “This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.”
Translated, that means it basically tells you only what the respondents thought and cannot be used (as Romney used it) to draw any broader conclusions about what it means about the thoughts of all small business owners around the country. (The Chamber did not respond to a call for comment.)
As the American Association for Public Opinion Research warns: “Surveys based on self-selected volunteers do not have that sort of known relationship to the target population and are subject to unknown, non-measurable biases. Even if opt-in surveys are based on probability samples drawn from very large pools of volunteers, their results still suffer from unknown biases stemming from the fact that the pool has no knowable relationships with the full target population.”
The Pinocchio Test
We puzzled over where to assign the Pinocchios for this cascade of errors. To the TV news station that started it all? Or to the Romney campaign, for trying to seize on an issue without thinking through the facts? So many targets, not enough Pinocchios.
In the end, we decided to be generous and give President Obama a rare Geppetto for giving a perfectly reasonable answer to a wrong-headed question. The health care law has largely not been implemented — and its fate hangs in the balance before the Supreme Court — and so, at this point, it would seem rather strange for a business to be cutting jobs because of it.
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